Luxury travel news and reviews for Mexico, Central America, and South America

Luxury Goods Selling Again, but Tastes Changing

Several luxury goods makers have reported an increase in sales recently, with the latest being a 19% increase in year-over-year sales at Hermès reported last week. This is on the heels of LVMH reporting an 11% increase earlier. April same-store sales at Saks were up 3.2%.

What’s interesting though is much of this rebound is coming not from established markets, but from the developing world. Apparently we’ve moved on to other things, if you believe the results from a groundbreaking survey last month. Conducted by Dwell Research (an offshoot of Dwell magazine), the participants making $200,000 or more annual aren’t engaged with the brands you would expect. Here’s how Advertising Age saw the results:

According to the survey respondents, “luxury” brands, per se, are no longer important to them, or even relevant; neither is “overall social status,” they say. This generation of nouveau riche is shunning “conspicuous consumption” in favor of brands that represent quality, aesthetics and authenticity. These attributes, along with uniqueness, integrity, design and performance, represent today’s “prestige” for these high-end consumers. And their emerging values and brand motivations make these consumers a more diverse group than one might assume.

This is interesting because it ties into the dramatic growth in luxury tourism in Latin America. People go to Peru, Brazil, or Belize for very different reasons than they go to Paris or Dubai and it has very little to do with showing off. The tours are more authentic, the hotels are more individualistic, and the experiences are more about doing than being seen. Perhaps it’s part of the reason why nowhere in Latin America is the upscale hotel scene dominated by international chains. Apart from the rare Four Seasons or Ritz-Carlton here and there, you stay in lodges or inns with a real sense of place.

A brand does not have to be expensive to attract New Affluents. What they’re now demanding from brands is a new and different kind of relationship. And, as supported by these findings, the days of controlled, top-down brand marketing are over, especially for this sector. These wealthy and would-be elites are actually looking for brand interaction — a dialogue — based on integrity, authenticity and performance. And not only are they equipped for interaction, they’re demanding it.

So what brands do New Affluents find meaningful, authentic and relevant? Apple, Sony, BMW and Ralph Lauren, unsurprisingly. But Crate & Barrel, Ikea, Whole Foods and Levi’s, too. Porsche, Lexus, Chanel and Viking. And Target, North Face, Volkswagen and The Gap. Missing from this segment’s 75 favorites list are classic luxury brands like Cadillac, Gucci, Louis Vuitton, Armani and Versace.

It may not surprise you, if you’ve spent time on adventure tours in Central or South America, that Gucci and Versace don’t make much of an appearance—except when you’re around upwardly mobile locals. What you will see on travelers are lots of are brands that are defined by durability and quality. North Face, yes, and also ExOfficio, Tilley, Keen, Eagle Creek, and Canon. Whether ungodly wealthy or just well off enough to travel in style now and then, we’re looking for brands that deliver and have integrity.

The one big caveat in this study is the median age was 45. So grandma may still care about the prestige of the label. If you’re looking to the future though, attributes like integrity, sustainability, and value are going to have to trump sheer cachet.

What about you? Do luxury brands still matter, whether it’s Armani or Aman Resorts?

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Comments (4)

LindaMay 11, 2010

I feel like it achieves the opposite effect when you wear some of these luxury brands because there are so many knock-offs out there with their logo on it that you see them everywhere, especially in the developing world. People don’t bother to make knock-offs of ExOfficio or Tilley clothing because those brands don’t have huge logos for people trying to show off like you see with LV or Chanel. People buy Canon or shop at Target because of good quality for a good price, not to impress strangers.

If you’re really into luxury travel than i suggest visiting Peru and staying in the hotel monasterio or the libertador in cusco; these are in a whole other level and have both been mentioned among the best hotels int he world. Take the hiram binham train up to machu picchu (his train at $500/ ticket has everything you need)..and there are more luxuries to be had here, contact http://www.closerperu.com for peru tours and any special deals they might have

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